Rules, worked through
How the daily drawdown limit works on a prop challenge
The daily drawdown limit is set once a day from your closed balance and checked against live equity. A worked $50K Sprint example, the swap timing, and which floor binds.
Most challenges end on the daily drawdown limit, not the maximum one. It is the rule traders feel they understand and then break anyway, usually because of one detail: the limit is set from a closed balance but checked against live equity.
This article walks through the rule as it is written in the VFUNDED Challenge Rules, with real numbers from a $50,000 Sprint.
The rule in one line
Every day at 00:00 server time the platform records your Starting Day Balance: the closed balance, after the night's swap charges. The daily floor for the whole day is set from it.
- Starting Day Balance
- $50,000
- Daily limit on Sprint, 4%
- −$2,000
- Daily floor for today
- $48,000
From that moment until the next rollover, your floating equity has to stay above $48,000. Floating equity is everything together: closed profit and loss for the day, open trades, swaps and commissions. If it reaches or falls below the floor at any moment, the account is closed. It does not help that the price came back a minute later.
Closed profit does not protect open losses
This is the case that surprises people. Say you close two good trades in the morning and are up $800 on the day. In the afternoon an open trade goes against you by $2,900.
- Starting Day Balance
- $50,000
- Closed today
- +$800
- Open trade
- −$2,900
- Floating equity
- $47,900
- Daily floor
- $48,000
The closed balance is $50,800, above where the day started. The equity is $47,900, below the floor. The account is breached. The morning's profit counted, but the floor did not move up with it, because the floor is fixed at 00:00 and only moves at the next rollover.
Two floors, and the higher one binds
The daily floor is not the only one. Sprint, Classic and Ascend also have a static maximum drawdown floor, set once from the account size and never moved. On a $50,000 Sprint in the evaluation that floor is 6% below the start:
- Account size
- $50,000
- Maximum drawdown on Sprint evaluation, 6%
- −$3,000
- Static floor, for the life of the account
- $47,000
Each day, whichever floor is higher is the one you are really trading against. Two days from the same account show how that changes:
| Starting Day Balance | Daily floor (4%) | Static floor | Floor that binds | Room today |
|---|---|---|---|---|
| $51,200 | $49,152 | $47,000 | Daily | $2,048 |
| $48,500 | $46,560 | $47,000 | Static | $1,500 |
After a good run the daily floor is the one in charge. After a losing stretch the static floor takes over and the room for the day shrinks. It is $1,500 here, not the $1,940 that 4% of the balance would suggest.
Swaps and the midnight rollover
The order of events at 00:00 server time matters:
- Swap charges for positions held overnight are deducted.
- The Starting Day Balance is recorded.
- The new daily floor is calculated.
Because swaps come first, a swap charged at rollover cannot breach the new day's floor. It can still breach the old one: if your equity is sitting just above yesterday's floor when the swap is applied, the swap can push it through before the new day starts. On many instruments the Wednesday rollover carries a triple swap for the weekend.
The rollover window runs from about 23:55 to 00:15 server time. Trading is allowed, but spreads can widen and fills can slip, so a position that is close to a floor is at its most exposed then.
Weekends count
The daily limit applies on every calendar day, weekends included. A position held over the weekend is still measured against the floor, and a gap at the Monday open is measured the same way as any other price move.
The numbers for every challenge
| Challenge | Daily limit | Maximum drawdown |
|---|---|---|
| Sprint, evaluation | 4% | 6% static |
| Classic, both phases | 5% | 10% static |
| Ascend, phase 1 | 5% | 10% static |
| Ascend, phases 2 and 3 | 4% | 8% static |
| Sprint, Classic, Ascend funded | 4%, 5%, 6% | 10% static |
| Edge | 3% | 5% trailing |
The daily percentage is always taken from that day's Starting Day Balance. The maximum is taken from the account size, except on Edge, where it trails the highest equity reached. That model works differently enough to have its own article: static vs trailing drawdown.
What to take from this
- Plan each day against the room to the higher floor, not against the balance.
- Morning profit does not widen the afternoon's room. Open losses count in full.
- Treat the minutes around 00:00 server time with care if you are close to a floor.
- When a losing stretch brings the static floor into play, the day's room is smaller than the percentage suggests.
The full wording is in sections 4.2, 4.3, 6.4 and 6.6 of the Challenge Rules.
This article explains the published VFUNDED rules with worked examples. It is not financial advice. VFUNDED provides simulated trading evaluations: trading activity is simulated and performance rewards are not guaranteed. Where this article and the Challenge Rules differ, the Challenge Rules apply.